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March 23, 2012

The value of real estate data.

There is no organization dedicated to making high quality, accurate and timely commercial real estate data available to the greater industry or outside organizations.  The closest we have is CoStar who has no real competition and their model is not setup to incentivize their sources of information to get them the best information.  It’s a poorly kept secret that all brokers use CoStar (to some extent) and that the best brokers have their own databases of market information that they don’t make available so that they can pitch against CoStar data.

CoStar invests a lot of money in making sure that no competitors in the commercial real estate data space step up and try and take away their position.  Their investment to buy LoopNet and Virtual Premise is the best example of this.  It’s not that they are acting malevolently.  It’s that they know data is power and if someone else does it better than them they’re in a lot of trouble.  CoStar is doing what it is supposed to do and protecting its business.

The real problem with real estate data is that when a deal is completed only about 10 people know and have access to the actual terms.  There really isn’t some public repository of lease documents to see what the market rates have been in the last 6 months.  The bottleneck for information is the brokers.  If they are not willing to share then you are never going to see that information.  Once you can solve that problem it’s just a matter of scaling the solution.

Just a tiny little nut to crack.

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